Sunday, October 11, 2009

'Fibre-rich diet is gaining acceptance'. USA, LLC

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THOUGH idli-parantha lovers may find it hard to believe, health conscious middle India is now beginning to add more fibre to its diet. And loving it, by all appearances. As Shyam Bagri of Bagrrys India Ltd tells Nidhi Nath Srinivas, smaller families, working women and more westernised eating habits are the three pillars on which the breakfast cereals sector is pegging its hopes.

What is the size of the organised breakfast cereal market?

The only major Indian players in this market are Mohun's Corn Flakes, HVOC's Champion Corn Flakes and Oats, and Bagrrys' Oats and Muesli apart from MNC Kellog's. These are some of the corporates who have an all-India presence. All the rest are either on the state or town level. This is why it is very difficult to give an approximation of the size of the organised Indian breakfast cereal market.

What is the country's biggest market for breakfast cereals?

South India, especially Kerala is one of the biggest market for breakfast cereals. The reason is the high level of education and almost 100 per cent literacy rate. Perhaps the large number of families with NRIs is also a reason for acceptance of breakfast cereals.

What are the biggest barriers to entry for other players?

We suppose the main reason for few players in this sector is because the investment required is big but the returns are not commensurate with costs. Moreover, though all the raw material going into muesli (grains, honey, almonds, raisins) are agricultural products, they are subject to heavy central excise duty and sales tax.

Breakfast habits of Indians vary too from place to place and traditional foods are the biggest barrier for breakfast cereals. But as more women start working, convenience foods are gaining acceptance. People have also started understanding the concept of fibre and its importance in good health.

While corn flakes and dalia have been around for a while, oats and other whole cereals are still new to most Indians. What has been their acceptance rate?

Acceptance rate of oats has shown a slow but steady increase over the last few years. In fact, Champion Oats have been accepted now for the last 40 years while Bagrrys has also been around for the last 10 years. Acceptance of muesli is also growing because muesli is high in fibre.

Do you think breakfast cereals would become more popular if they were a little cheaper?

Yes that is true. But the other side of the coin is the high marketing and manufacturing costs, which add to the ex-factory cost. Heavy central excise duties and sales tax levied on these agriculture based products also add to costs.

What made you decide to introduce White Oats as a breakfast cereal?

I realised through various articles, newspapers, magazines and books the importance of fibre in daily diet. I also felt that high fibre, wholesome breakfast cereals are not available in the Indian market. We started with Wheat Bran.

Though the economics were not at all encouraging, appreciation of the people who ate our Wheat Bran motivated us to continue. Alongwith Wheat Bran, we introduced White Oats: they are the best source of soluble fibre. We also made Oat Bran out of it.

Is there a potential for export of breakfast cereals from India in markets other than the Middle East?

Export of new breakfast cereals from India is negligible. In fact, after liberalisation, we see good breakfast cereals are being imported into India.

As MNCs have been unable to make a profit in India's breakfast cereal market, do you think local brands have a better chance of success?

Local brands have lower infrastructure costs and can, therefore, at least keep themselves afloat in these competitive conditions. Moreover, though MNCs may be making losses initially, they are investing in the future of their brand. The returns will come eventually.

Source Citation:"'Fibre-rich diet is gaining acceptance'." Asia Africa Intelligence Wire (March 6, 2002): NA. Popular Magazines. Gale. BROWARD COUNTY LIBRARY. 11 Oct. 2009

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